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Ahead of OPEC Meeting, Oil Prices Gain Despite New U.S. Rigs

Ryan McQueeney
Updated

Oil prices rose more than 2% on Friday ahead of a weekend meeting between some of the world’s top oil producers. The meeting, which will include members of OPEC and other countries like Russia, is expected to establish a system for verifying compliance with the oil cartel’s recent deal to cut output by 1.8 million barrels per day.

Brent crude rose $1.31, or 2.46%, to $55.49 a barrel by 2:33 p.m. EST. West Texas Intermediate was up $1.02, or 1.99%, to $52.39 per barrel at that time.

These gains were limited by the news that U.S. producers are continuing to open new rigs. According to Baker Hughes BHI, U.S. oil producers added 29 rigs over the past week; six gas rigs were also opened this week. This brings to overall rig count to 694.

The Permian Basin in West Texas continues to be a hotspot for American producers. 13 rigs were added in the region this past week, and major producers like ExxonMobil XOM and Noble Energy NBL have recently acquired land in the basin.

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Despite the increase in U.S. production and investment, oil traders are optimistic about prices thanks to OPEC’s deal. This weekend’s meeting in Vienna is expected to be the final step in the cartel’s plan to cut production.

According to Reuters, Saudi Arabian Energy Minister Khalid al-Falih said that 1.5 million of the agreed-upon 1.8 million barrels of oil have been removed from the market this month.

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Baker Hughes Inc. (BHI): Free Stock Analysis Report
 
Exxon Mobil Corp. (XOM): Free Stock Analysis Report
 
Noble Energy Inc. (NBL): Free Stock Analysis Report
 
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